As per a Bloomberg report, CRM platform provider salesforce.com, Inc. (CRM) has entered into a strategic alliance with the world’s largest software maker, Microsoft Corp. (MSFT), to offer Salesforce’s CRM services on Microsoft Azure.
The partnership ensures tighter integration between Microsoft and Salesforce clouds, which will help customers to easily and securely move their data between the two platforms.
Additionally, the agreement will improve ties between the two companies. Microsoft’s customer relationship management (CRM) software equips organizations with advanced cloud-based technologies that increase the efficiency of their operations, solve complex business challenges and improve resource allocation. Salesforce also offers similar capabilities.
We believe that the partnership will prove to be mutually beneficial for both the companies going forward. According to the research firm Gartner, Salesforce recorded the fastest growth, breaking into the list of top 10 SaaS providers for the first time from the 12th position in 2013. We believe that the rapid adoption of Salesforce platforms will help Microsoft, as it will not only remove a significant competitor but also demonstrate opportunities in the ever-growing cloud computing segment.
It is also worth noting that Salesforce had previously inked a deal with Oracle Corp. (ORCL). This nine-year Oracle-Salesforce deal covers every aspect of cloud computing. Under the terms of the deal, Salesforce software will run on Oracle’s Linux (previously Salesforce used Red Hat Linux) and its cloud based applications will support Exadata hardware.
These partnerships will add value to Salesforce’s existing portfolio and the resultant synergies will benefit the company in the long run.
Although, the company is growing reasonably in the cloud market, growth prospects have been rationalized to a considerable extent due to intensifying competition from IBM (IBM) and SAP AG. Moreover, continued weakness in Europe, currency headwinds and increased investments in research & development (R&D) will keep margins under pressure.
Currently, Salesforce has a Zacks Rank #3 (Hold).
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